Moe never requested audit, Raceway Park accountant testifies

The accountant for Spokane Raceway Park testified Monday that he has never been asked to conduct a full-blown audit by Orville Moe, the facility’s embattled general partner now accused of fraud and tax evasion.

Such an audit would be almost impossible because the financial history of the drag strip and oval track in Airway Heights stretches back 30 years, accountant Larry Wyatt testified.

He was called as a witness in the ongoing hearing in which 500 limited partners, led by Ed Torrison and Don Materne, both of Spokane, are seeking to have Moe, the general partner, replaced with a receiver who would assume financial and operational control.

After another day of testimony today, Superior Court Judge Robert Austin is expected to schedule another two or three days of hearings before rendering his ruling.

Again Monday, his courtroom was filled with many of the limited partners who bought $500 and $5,000 shares in Washington Motorsports, which joined with general partner Spokane Raceway Park Inc. to build and operate the track.

When they bought their shares in the early 1970s, the limited partners were assured they would receive annual financial audits, but they haven’t been prepared on a regular basis.

Instead, Moe directed Wyatt, of the accounting firm of LeMasters & Daniels, to prepare less-expensive “compilation reports,” a form of financial statement that is generally prepared from the information given the accountant by the client, without independent verification.

With assets estimated between $20 million and $120 million, Wyatt was asked by plaintiffs’ attorney Mike Esler, of Portland, why an audit hasn’t been performed.

“Couldn’t you well afford an audit with those kinds of assets?” Esler asked.

“We were never engaged to do an audit,” Wyatt testified.

An audit “would be very expensive and you wouldn’t be able to find a firm that would render an unqualified and clean opinon” because of the history of the facility, Wyatt testified.

Esler began his questioning by asking Wyatt why he claims on the LeMasters & Daniels Web site that he has a four-year bachelor of arts degree from the University of Idaho, when he only has a two-year associate degree from the now-defunct Kinman Business University in Spokane. Wyatt conceded that was a misrepresentation that deserves correction.

The plaintiffs’ attorney then asked Wyatt when he became aware that Moe pays ticket-takers, security guards and crowd-control attendants in cash taken out of daily receipts, without having the employees fill out W-2s or Form 1099s for taxes.

Esler posed a line of questions suggesting such cash payments are not only illegal and irregular, but could affect net revenue.

“There’s no law that says you can’t pay an employee in cash or gold bullion,” Wyatt responded from the witness stand. “But you should issue 1099s.”

Earlier, the accountant was asked about getting a Nov. 3, 2003, letter from Orville Moe’s brother, Maynard Moe, who alleged “there was a massive fraud going on at Spokane Raceway Park.”

Maynard Moe wrote the letter, demanding financial records from Wyatt and LeMasters & Daniels, shortly after he and his other brother, Earl Moe, were voted off the board of directors at Spokane Raceway Park by Orville Moe and his attorney, Robert Kovacevich.

They picked Dominick Zamora, one of Wyatt’s accounting partners at LeMasters & Daniels, to become secretary-treasurer of Spokane Raceway Park Inc.

Wyatt testified that Kovacevich has now rendered an opinion that Zamora, who was listed as a Spokane Raceway Park officer from Nov. 9, 2003, to December 2004, really never assumed the office because he never attended a meeting or took any official action.

The accountant said a quick check of ticket sales tallies showed Maynard Moe’s accusations and revenue projections in Maynard Moe’s letter “were completely unfounded.”